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AGPA applies to export LNG from Valdez Alaska Gasline Port Authority asks Department of Energy for authorization for 2.5 bcf per day to Asian-Pacific rim countries Kristen Nelson Petroleum News
The Alaska Gasline Port Authority has applied to the U.S. Department of Energy for long-term authorization to export liquefied natural gas from Valdez.
The Alaska Gasline Port Authority, AGPA, is a municipal port authority formed in 1999 by the Fairbanks North Star Borough, the City of Valdez and the North Slope Borough; the North Slope Borough dropped out in 2010.
AGPA has been promoting an LNG project since its formation and in the past proposed a gas treatment plant on the North Slope, a gas pipeline from the North Slope to Valdez and a liquefaction faction at Valdez.
AGPA’s general counsel, Bill Walker, said in a July 5 filing to the Department of Energy that the authority now anticipates that facilities upstream of the Valdez LNG terminal would be constructed by the Alaska Gasline Inducement Act licensee, TransCanada Alaska, and its project partners.
He said the AGPA project is now focused on the terminal, which is “substantially similar” to that previously proposed by Yukon Pacific Corp., founded by former Gov. Wally Hickel in 1981. Yukon Pacific spent some two decades working on an LNG export project to the Far East, from the early 1980s through the early 2000s.
Anderson Bay AGPA is in the process of applying to lease land at Anderson Bay some 5 miles from the existing trans-Alaska oil pipeline terminal, the same site leased for a number of years to Yukon Pacific, Walker said.
Yukon Pacific received FERC approval for a liquefaction terminal at Anderson Bay, as well as a long-term authorization from the Department of Energy for export of 14 million metric tons of LNG per year to Japan, Korea and Taiwan, he said.
Walker said AGPA is requesting authorization to export some 2.5 billion cubic feet of natural gas per day, approximately 19 million metric tons per year, to countries with which the United States has a Free Trade Agreement. He said the port authority “has received significant interest from the market” in the project.
Because Alaska statutes provide “favorable language regarding the lease of state land to port authorities,” Walker said, AGPA should receive “preferential treatment” on its lease application.
He described two other options for the liquefaction facility.
It could be co-located with the existing trans-Alaska oil pipeline marine oil terminal, which was built to handle 2.1 million barrels per day and currently is receiving some 600,000 bpd. Walker said AGPA contracted with an engineering company for an evaluation of the feasibility of co-locating the LNG terminal adjacent to the Valdez Marine Terminal and that work indicated that would be “a viable option.”
A third option would be use of floating liquefaction terminal facilities in the waters of Port Valdez, an option under construction for LNG projects in both Australia and the U.S. Gulf Coast, with one of the projects set for operation in 2015, he said.
Gas from North Slope Without discussing specific sources, Walker said, “Natural gas to be liquefied and exported will come from Alaska’s North Slope.”
He discussed known reserves on the North Slope, 36 trillion cubic feet, and U.S. Geological Survey estimates of 127 tcf of technically recoverable natural gas which remains to be discovered, as well as the expectation that current “aggressive oil and gas exploration efforts offshore” the North Slope will result in the discovery of large volumes of natural gas.
“AGPA requests long-term, multi-contract authorization for the exportation of domestically produced LNG” for 25 years from the earlier of the date LNG is first exported or eight years from the date of the authorization.
Authorization is requested to export to any country with the capacity to import LNG and with which the U.S. has a Free Trade Agreement.
Walker said AGPA also requests “authorization to act as an agent for third parties seeking to liquefy and export LNG under liquefaction tolling agreements ... whereby AGPA will not hold title to the natural gas, but rather receive the natural gas at the liquefaction facility” and provide the third party with LNG to load onto tankers.
He said the Department of Energy has granted export licenses using the liquefaction tolling agreement model in place of or in addition to the traditional long-term contract model.
“AGPA anticipates entering into one or more LTAs as well as long-term (more than two years and up to 25 years) contractual agreements with customer for natural gas liquefaction and LNG export services,” Walker said.
He said, “Long-term authorization to export LNG is required in order to negotiate long-term contracts with customers.”
The Federal Energy Regulatory Commission would have authority over siting, construction and operation of the LNG terminal facilities, Walker said, and AGPA would initiate FERC’s National Environmental Protection Act pre-filing process after receiving the requested authorization from the Department of Energy and would then file an application with FERC for liquefaction of natural gas and export of LNG from Valdez.
AGPA is requesting a conditional order authorizing LNG export, Walker said, “conditioned on completion of the environmental review by FERC.”
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